The future of cannabis after debt restructuring

The federal government has decided to restructure marijuana debt. So what happens next and how long will it take to finish?

The Drug Enforcement Agency (DEA) has approved the Health and Human Service (HHS) recommendation to move cannabis to Schedule III, classifying Schedule III drugs as having a moderate to low potential for physical and psychological dependence (drugs of the List III includes ketamine). , anabolic steroids and testosterone). This rescheduling will have a significant impact on state-legal cannabis businesses, but some uncertainty remains. Once the DEA publishes its proposed rule, it will be reviewed by the White House Office of Management and Budget (“White House”) and, if approved, moved to a public comment period. Specifically, the DEA could redesignate cannabis by issuing a final order and bypass the notice and comment period, allowing the change to take effect 30 days after publication in the Federal Register.

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However, it seems certain that the DEA will do so through the proposed rule, which will be followed by a comment period of 30 to 90 days. This comment period will be followed, if desired, by a formal administrative hearing, which opponents of the rescheduling will surely want, along with a barrage of comments ranging from why cannabis should remain in Schedule I to why it shouldn't should be moved down as Annex II. While a move to Schedule III is almost certain, it is important that advocates also provide comments to ensure a solid record in support of marijuana reclassification.

Once the comment period and administrative hearing have closed, the DEA will review the entire record and issue its final decision based on its analysis, the HHS analysis, the comments submitted, and the administrative hearing record. The time frame for issuing a final rule is uncertain and not specified in law. However, because the DEA is required to review and respond to every comment submitted during the notice period, this may take some time.

Photo by 2H Media via Unsplash

Regardless of whether the DEA directly issues a final order or permits notice and comment, the final decision/order will not become effective until 30 days after its publication in the Federal Register. During this period, an aggrieved party who participated in the notice and comment period has 30 days to file a lawsuit seeking judicial review of the agency's decision. In the event of a lawsuit, the effective date of the reclassification may be delayed by a court order.

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Federal regulations

Cannabis re-planning will likely lead to additional federal regulations, but the nature of those regulations is uncertain. Since 2009, during the Obama administration, the federal government refused to enforce federal laws against the overwhelming majority of state-compliant marijuana businesses. The federal government's reluctance since the 2013 Cole Memorandum continued even though Justice Department enforcement guidelines were rescinded during the Trump administration. It is possible that the DOJ will issue another enforcement memo. While still uncertain, enforcement action could follow cannabis rescheduling to create a more cohesive national industry. For example, adding cannabis to Schedule III could prompt the FDA to crack down on false and misleading drug claims, as is the case with hemp products. The DEA would continue to regulate cannabis as under Schedule I, but could now require pharmacies to comply with pharmacy regulations and the significant requirements associated with them. It is unclear, but unlikely, that the DEA will enforce pharmacy obligations for state-licensed pharmacies, as the difficulties and resources required associated with such enforcement will likely be too burdensome for the DEA in the immediate aftermath of the rescheduling.

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The FDA could also become more involved in the regulation of cannabis, particularly regarding dietary supplements of cannabis products and claims on conventional foods. Although regulatory clarity would be desirable, we must be wary of over-regulation of the various cannabinoids (or compounds found in cannabis). It is likely that the FDA will receive an influx of new drug applications following the cannabis rescheduling, as FDA approval of certain cannabinoids as drugs can be very valuable. However, because FDA-approved medications typically cannot be legally added to conventional foods or dietary supplements, FDA approval of certain cannabinoids would create a complicated regulatory environment and cause subsequent confusion among consumers (similar to FDA approval of CBD in form of Epidiolex).

Timeline

As for the timing of the rescheduling process, it will not happen overnight. Once approved by the White House, the DEA will likely initiate a public comment period. While this comment period itself will likely last 30 to 90 days, the entire rescheduling process may take much longer. It took years for a previous drug rescheduling to fully reschedule hydrocodone combination product regulations (although the time span from the HHS recommendation to the new rule taking effect was within a year). Following HHS's quick response and recommendation of cannabis rescheduling, it is possible that the DEA will release its final rule as early as 2024.

Terran Cooper is a regular contributor to The Fresh Toast. He is part of Falcon Rappaport & Berkman LLP. This article was developed in part with the help of Andrew Cooper and Matthew Foreman.